Win in Every Multiple Offer Situation
I’ve witnessed the most elite investors in the game follow certain steps that win them more deals than everybody else. The majority of the competitive bids that I see won by investors are won by investors who put in the work way before the deal even comes to market and way before they even turn in an offer. And part of that work is building a strong reputation with the listing broker and every broker in the market. Remember they're the ones who are going to be your advocate to the seller in your absence. The first thing to understand is that over 90% of all apartment sales over 10 units are procured by a broker. Winning more competitive bids happens as soon as the listing hits the market. You're going to deeply research the listing broker, you're going to find their bio on their website, you want to go to their social media websites, you want to read articles about them, you want to understand the closings they've worked on, and what some of their new listings are. On LinkedIn and Facebook, find out if you have any mutual connections and friends. Study their profiles and see what their hobbies are. The point here is to sort of personalize the transaction and personalize the relationship so when you make that first point of contact you already have something in common that you can discuss. Next, you're going to call them immediately and follow that up with an email. If you don't reach them by phone the first time, still send an email, and also text. By contacting them as soon as possible after the listing hits the market it shows the broker and the seller that you're serious about this deal. Depending on when the listing hits the market, the first question you should ask is if the property is still available. If it's not available the call isn’t over. Here's where you ask more questions. Find out when it came available. Find out how many buyers were interested, how many offers it got, and see if the broker will still share with you the marketing package and the financials after you sign a confidentiality agreement of course. This way you can show that broker you're still very serious about the property because anything can happen. If that deal falls apart the broker may come back to you. The goal is when you hang up with that broker, even if the property wasn't available when you called, they want to feel like you're someone they should keep in contact with. The whole time this deal is under contract it’s not a bad idea to keep in contact with that broker. If the property is still available, and let's assume you don't know the broker yet, tell him or her about yourself. Give your background, the assets you own, the lenders you work with, the deals you’ve done, etc. After you've told them a little bit about yourself ask about the listing, how much interest has there been, have any offers been put in yet, and this is really important, try to find out a little more about who the seller is? Who the actual names of the principles are, where are they based out of, maybe you lived there before, done business there before, or maybe you just visited? You're just looking for commonalities. Has the broker sold them assets before? That'll give you a glimpse into what they like and don't like in the transaction. Find out how the owner(s) are structured. Are they just a private ownership, have partners, or are they a syndication or national or a REIT? Also, ask why they're selling. That always kind of gives you a good idea of how to make your offer. And with all this information, you want to do a little bit of research on social media sites and google and see if you can find additional information about them so you can kind of paint a picture of who the seller is. Make this a personalized transaction and that will greatly increase your possibility of being the winning bidder in the end. Another question to ask the broker while you're on the phone with them is where they think it'll trade at on price. Now sometimes the sellers themselves won't indicate to their listing broker what their strike price is, so you'll be getting the opinion of the broker, but anything will help you structure a deal for them. Next, ask the broker if the seller's working with any time constraints. Maybe the seller has to close by the end of the year, or maybe the seller intends to do a 1031 exchange. If that's the case then it may be a situation where you would do a regular fast due diligence period, but the seller may prefer a much longer close period with a sizable deposit from you so they know you're not going away. That would allow them more time to find a replacement asset. Asking a simple question about time constraints that alone could put you above other offers who didn't take the time to find out what’s important to that seller. Another great question to ask the broker is what kind of deposit structures they would like to see on the offer. What size initial deposit, what size should the second deposit be? Also, go ahead and ask what kind of due diligence period would be ideal and of course, follow up with the closing period. You see the broker knows the seller way more than you do and they can reveal to you based on their knowledge of what the seller's goals are how a deal could be structured ideally for them which will put you above the competition. Another good question to ask is what kind of documents are available to you as the buyer once you sign a CA. Are there environmental reports, previous surveys, is there title available, are all the financials available? And another really good question to ask is about the management. If the seller is also a property management firm, or if they have a third-party company manage, find out if they have an interest in continuing to manage the property after you buy it. You can also ask the broker about any on-site staff. Ask if the on-site staff would want to stick around after the closing. And the reason you want to ask this question is I can't tell you how many times I’ve come across sellers who have had on-site staff with them for years and years and years and they've become like family to the point where it's actually important to them to see that they have continued employment. So, if you can confirm early on and in your offer, that you would be interested in keeping the current property management and/or on-site staff, I promise your offer will go a long way. At the end of the phone call, ask how you can sign the confidentiality agreement, and then sign it immediately to show your interest level. Once you do that you should immediately email the broker your bio package. Keep in contact with the broker by asking questions via email or text or whatever you feel is appropriate about the property even if you don't have questions. If and once it's time to tour the property, ask the broker if it’s possible to get the seller to show up. That's kind of rare, but if they will it's a great opportunity to build rapport. When you schedule the appointment try to schedule it for just a little bit before lunchtime so that when you finish up with a tour it would be great to offer to treat the broker to lunch so that you can again sell yourself a little bit more.
Quick side note that's really important, if this listing were to happen to be brought to you by another broker who's not the listing agent and you may not like this, I would highly encourage you to pay that broker directly. That will make you look more appealing to the listing broker, who remember is going to be your advocate to the seller, by paying the broker that brought you the deal. It's usually a very small percentage of the deal and that keeps two brokers very happy and will most like net you way more deals in the future. And when you're in competitive bids especially if those brokers are involved, they're going to remember that. When you get notified by the broker that you've won the bid it's important to let them know you're excited and you can't wait to move forward because likely that excitement will also be forwarded to the seller and all the partners. Now if you lose the deal, send handwritten thank you letters to the broker and the seller. In the seller's note, you should compliment the asset and the broker they used and let them know if anything happens you're here and you love that property. In the broker's letter, compliment their marketing and communications and again let them know if anything comes up to please come back to you. Notice I didn't spend much time at all on the offer itself because the offer is going to be the offer. In today's time, with the technology and the access to data, most pricing of assets is spot on even if you think some of them are overpriced. Remember the terms of a deal are just one part of this. The larger part of winning more multiple offer bids and getting deals sent to you is your reputation. It's how people are watching the way you treat others, the way you react in a transaction, and the way you react to things that come up. The Elite Investors I’ve watched in my career, the ones who transact way more than the average investor, all have one thing in common: they have phenomenal reputations that precede them. They've built their reputations for the most part before a transaction even happens. They build rapport with brokers and investors and their staff and the phase one environmental guy and the property manager and the property condition report people. All of the people involved in the transaction are watching how you operate, how you talk to other people, and how you treat other people. And when you get into a competitive bid situation, you’ll be way ahead of everyone else because all those people, and the brokers and the sellers will know you’re serious and more like to close on the deal. It’s not always just about the price and the terms.
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